Case summary:
The Company E is developing educational software for the primary and secondary school markets. The company believes that the industry will have a shake out or decline. So this to survive in the industry company E wants to grab the market shares and this requires a huge infusion of new capital.
Person P after observing the market trends analyze that the stock price of the company may rise in future thus, cannot raise the new capital and also due to the high interest rates and B rating of the firm it cannot issue the debt instruments. The Person d came up with three alternatives,
Characters in the case:
- Company E
- Person D
To determine: The knowledge of call option helps to understand the warrants and convertibles.
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Chapter 20 Solutions
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